Child Tax Credit payments largely used on necessities, including education costs

About 40 percent of low-income families nationwide reported using expanded Child Tax Credit payments on education-related expenses including after-school programs, tutoring services, transportation to school, tuition, books and other supplies, according to the Center on Budget and Policy Priorities.

Over 90 percent of families with incomes of less than $35,000 are using their monthly Child Tax Credit payments for the most basic household expenses, such as food, clothing, shelter and utilities. The credits were also commonly used for other needs including monthly car payments, child care for those with children under age 5 and paying down debt.

In California, 87 percent of families reported spending payments on basic needs; 89 percent reported spending payments on basic needs and/or education costs.

“Families are making these investments nationwide: in every state and the District of Columbia, large majorities of low-income families are making such use of the credit, according to our new analysis of Census Bureau data covering the first three months of payments,” wrote Claire Zippel, senior research analyst for the Center. “Many of these households are receiving the full Child Tax Credit for the first time thanks to the American Rescue Plan’s credit expansion.”

The changes made under the American Rescue Plan temporarily increased the credit amount, halting a policy that prevented 27 million children from receiving the full credit because their parents earned too little or lacked earnings in a given year, and allowed the credit to be paid monthly rather than once a year at tax time.

The expanded program expires at the end of 2021. “Congress should make it a top priority to ensure that the full credit remains permanently available to children in families with the lowest incomes, a measure that in percentage terms drives 87 percent of the expansion’s anti-poverty impact,” Zippel concluded.

The need is clear

Census Bureau data from 2019 showed 16 percent of children under 18, or 11.6 million youth, live in poverty. That was prior to the pandemic, during which time 74.7 million people have lost work according to Census data — the majority of whom were working low-wage jobs.

As a result, more students have reported feeling stressed, depressed or anxious as parents struggled to find or keep work during the past year, or even put food on the table. Indeed, between 7 and 13 percent of adults with children reported that their children sometimes or often didn’t eat enough in the last seven days because they couldn’t afford it, according to the Center on Budget and Policy Priorities. Households typically first scale back on food for adults before cutting back on what children have to eat, according to the report.

Experts say the homeless student population has likely increased as well, particularly among students of color. Data collected as recently as Sept. 29–Oct. 11 indicate that millions are having difficulty paying rent, with 28 percent of Black renters, 18 percent of Latino renters and 20 percent of Asian renters reporting they were not caught up on rent, compared to 12 percent of white renters.

School closures and distance learning for much of the last year and a half have led to concerns of underreporting of youth experiencing homelessness. Understanding schools are key in connecting homeless students and families with needed services, Gov. Gavin Newsom signed Assembly Bill 27 on Sept. 29, which requires local educational agencies to administer a housing questionnaire and report the results every year to the California Department of Education. It also establishes three technical assistance centers statewide that will create and facilitate training materials to help outline the needs of homeless youth and their families and assist LEAs in ensuring that all homeless students are identified.